Bookkeeping Basics for Small Business Owners: Everything You Need to Start Doing Your Own Bookkeeping

best way to keep books for small business

The best way to get a loan for a new business is to approach banks or other financial institutions and provide them with a business plan and your financial history. You can also look into government-backed loans, such as those offered by the SBA. Startups may also be able to get loans from alternative lenders, including online small business bookkeeping platforms such as Kiva. But if you’re willing to put in the work, it can be a great way to achieve your dreams and goals. Be sure to do your research, create a solid business plan and pivot along the way. Once you’re operational, don’t forget to stay focused and organized so you can continue to grow your business.

Online bookkeeping method

The major reports to include are the profit and loss, the balance sheet, and a cash flow analysis. Additionally, the aged accounts receivables and aged accounts payables reports are helpful in knowing which customers have not paid and which vendors are yet to be paid. These reports will help you gain greater insights into the financial health of your small business. As a small-business owner, solid bookkeeping is the best way to ensure that you get the most out of your return. Small businesses also manage their own accounts receivable to make sure they get paid on time for goods and services that have already been bought or rendered. The process involves sending estimates and invoices and keeping track of due dates.

  • Without it, you’ll only have a rough idea of how much money you have, which outstanding bills you need to pay and whether you have been paid for the goods or services you provide.
  • When creating a new document use the search templates function to find a host of business templates.
  • For example, “Mike’s Bike Shop” is doing business as “Mike’s Bikes.” The legal name of the business is “Mike’s Bike Shop,” and “Mike’s Bikes” is the DBA.
  • The software program can then make the calculations for you, giving you an accurate picture of your total income and spending that’s updated every time your money moves.
  • BTW, you can also hire a bookkeeping pro to help you out with reconciliation.
  • You don’t necessarily need to be on every social media platform available.

What Are Business Expenses?

  • You can connect our accounting software to your business bank account and import your transactions, reducing the amount of manual work you have to do and lowering the risk of making human mistakes.
  • By keeping your books organized and up-to-date, you can take control of your finances and make smart business decisions.
  • These tools can also automate your recurring profits and costs, effectively freeing up more of your time.
  • Don’t forget to visit the QuickBooks bookkeeping hub where you can find additional helpful information and definitions.
  • If you’re just starting out, are doing your books on your own and are still in the hobby stage, single-entry is probably right for you.

If you go this route, make sure to brush up on interview questions that’ll help you determine who’s the best fit. See our overall favorites, or choose a specific type of software to find the best options for you. “Find someone you get along with and who will partner with you on your long-term goals rather than just filing your taxes,” Hattrup says.

Bookkeeping 102

Make sure you establish an invoicing process that is efficient as possible. You want to be invoicing as soon as work is completed and accepted, and chasing any late payers persistently (but nicely). Your record keeping will be way more accurate, you’ll be able to search for, access, and share the data you need almost instantly, and everything can be securely backed up. Whether its scribbled notes, financial documents, or receipts, hard copies often get lost or damaged.

When you first begin the bookkeeping journey, collect everything you have that could be relevant to establishing financial history. Most accounting software offers a range of features that are suited for almost any type of small business. For both sales and purchases, it’s vital to have detailed, complete records of all transactions. You’ll need to note the amount, the date, and any other important details to ensure you can accurately summarize your finances when it comes time for tax season. Purchase receipts should always be kept as proof that the purchases took place.

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best way to keep books for small business

Business accounting and reporting standards vary slightly from province to province, so it’s important that you find a bookkeeper that’s based in the same region where you’re operating your business. If your business incorporates brick-and-mortar sales with online sales, payroll will be different between the two. To analyze which type of sales amount to the largest profit for your company, you must segregate in-person sales from online sales. Your goal in bookkeeping is to keep the most accurately detailed account of business financials. Determining the historical cost of something you’ve purchased or acquired is merely accounting for the purchase or acquisition at the then-rate you paid.

  • And since it takes equity, assets and liabilities — on top of expenses and income — into account, it typically gives you a more accurate financial snapshot of your business.
  • The specific amount of an emergency fund may depend on the size, scope, and operational costs of a given business.
  • The best accounting software can help you crunch the numbers, track the transactions, and balance the books.
  • It allows you to start building business credit, which can help you down the road when you need to take out a loan or line of credit.
  • With everything else you’re juggling as a small-business owner, it’s tempting to keep postponing your books.
  • A program like QuickBooks cloud accounting software, for example, can help you track income and expenses much faster than you could with a traditional ledger.

What happens if you get audited and don’t have receipts?

best way to keep books for small business

Although bookkeeping is an investment, it’s generally much more affordable than attempting to correct costly mistakes down the road. Bookkeeping beginners need quick wins to get started quickly and efficiently. The tips below are industry standards that will help any small business excel at bookkeeping.

  • You can keep books for a small business by being organised and methodical.
  • “As a business owner, you have to be confident in who you are and the products and services you provide — you have to be the voice of your business.”
  • Proper bookkeeping can help improve employee wellbeing and morale, and not just among the accounting department.
  • Similarly, an accurate representation of your current bookkeeping will allow you to forecast realistic financial goals for your business to hit over the next quarter or year.
  • This can be done by expanding your marketing efforts, improving your product or service, collaborating with other creators or adding new products or services that complement what you already offer.
  • I still do a shocking amount of bookkeeping, invoicing, and other financial tasks for my business with manual spreadsheets and processes.
  • Examples of payment processors include Square, ShopKeep, Shopify POS, and Stripe.

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